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Written by Nasreen Serji, a student at Government Law College, Thrissur, Kerala. 

LIFESTYLE EQUITIES CV AND ANR V. AMAZON TECHNOLOGIES INC CS(COMM) 443/2020

In an era where e-shopping is the new normal, the recent Delhi High Court judgement against Amazon Technologies will act as a warning to all digital retailers selling counterfeit products. Lifestyle Equities CV and Anr v. Amazon Technologies Inc CS(COMM) 443/2020 is a significant ruling and a wake-up call for all e-commerce platforms to scrutinize their products for IP breach. 

The case involves a complex trademark violation unlike a traditional one. The massive expansion of online retailers and consumers has led to the equal growth of counterfeit products. The identity of the infringing party is difficult with the transformation of e-commerce intermediaries and platforms.  This has introduced IP owners to a new set of challenges and violation of rights. The court has termed this as ‘e-infringement’, a new trend growing alongside online retailers. 

CASE HISTORY

The plaintiffs are Lifestyle Equities, engaged in manufacturing and sale of a wide range of products such as apparels, accessories and other lifestyle products, and Lifestyle Licensing. The trademark of the plaintiffs consists of a word mark, Beverly Hills Polo Club (BHPC) and a logo of a “charging polo pony, the rider and the polo stick or mallet”. 

The Defendants in the case are Amazon Technologies Inc, Cloudtail Pvt Ltd, and Amazon Seller Service Pvt Ltd. The plaintiffs alleged that the defendants had been engaging in activities that infringed their BHPC Logo mark. The sale of the infringing trademark products was available throughout the platform of the 1^st defendant i.e. Amazon Inc. 

CONTENTIONS

It was argued by the plaintiffs that the products sold by Amazon were at 1/10^th of the original price which caused large scale infringement of products through their platform. 

The 1^st defendant was proceeded against ex parte. Cloudtail, the 2^nd defendant, argued that any damages sought by the plaintiffs are liable to be paid by them and not by the 1^st defendant. This is with respect to the Amazon Brand License and Distribution Agreement (hereinafter “Agreement”) between the defendants that lends the licensing of Amazon mark to Cloudtail and that they are liable to indemnify Amazon for any loss from their part. However, it was held that this does not deny the plaintiffs from seeking damages from Amazon. 

The 3^rd defendant, Amazon Seller, is the intermediary platform that listed the products. They requested to be removed from the array of parties as no relief is sought from them. 

FINDINGS AND EVIDENCE

The Triple Identity Test was satisfied by the court to determine that the trademark had been infringed:

• Whether the device logo is identical.
• Whether the goods apparel are identical. 
• Whether the consumer trade channels are identical. 

The infringing garments were sold under the tag of ‘SYMBOL’, a mark owned by Amazon Technologies. The difference between the BHPC logo and the infringing logo on the garments were insignificant. Further, to boost their sales, the apparel was sold at a heavily discounted rate. 

The Agreement between the defendants clearly set out that Amazon holds significant control over Cloudtail including the indemnification for trademark infringement of third parties. Hence, making Amazon directly responsible for the unauthorized use of the Plaintiffs’ mark.

The court pointed out that the 1^st defendant has a dominant presence in the e-commerce space yet attempts to evade the liability of trademark infringement by wearing different personas, which, in the opinion of the court was not an honest conduct by the party. The absence of appearance by the said party from proceedings did not help in convincing the court otherwise. 

DAMAGES

It was found that the decline in sales by BHPC during the term of 2015-2020 was solely due to the heavily discounted counterfeit products found on e-commerce platforms. This affected the reputation of the brand as well. The extra effort by the plaintiff to advertise their product without compromising the quality or pricing was also taken into account while calculating damages.

The Lifestyle Equities v. Amazon U.K. Services Ltd., [2024] UKSC 8 was referred to point out the use of willful infringement and reprimanding such conduct of the defendant by awarding punitive and exemplary damages. 

The court further relied on the decision of the UK Court of Appeal in Gerber Garment Technology Inc. v. Lectra Systems Ltd., [1997] R.P.C. 443 in respect of patent infringement suit, if the patentee cannot prove their actual loss, the same is assessed on the reasonable royalty basis. The court referred to Strix Ltd v. Maharaja Appliances Limited, 2023: DHC:7695 to add various aspects while awarding damages such as ‘sales made by defendant, market share of defendant, royalty which the defendant would have paid’. The specific evidence led by the plaintiff allowed the court to an actual assessment of the economic harm caused due to the activities by the defendant giving an additional advantage to the plaintiff.  

The court took into consideration the following factors: 

• The loss incurred by the plaintiff due to the infringement
• The cost of restoring the lost market position by the plaintiff. 

A decree of permanent injunction and damages was granted in favor of the plaintiffs. 339 crores were awarded to the plaintiffs after considering the compensatory damages including lost royalties, advertising and promotional expenses. 

FUTURE IMPLICATIONS:

The Court considered the consequence of the online infringement as “totally immeasurable”. The mass production of counterfeited products holding infringed marks have a detrimental impact which can lead to extinction of the original brands in itself. The use of such logos further leads to consumer confusion and dilution of market, which may drive potential customers away from the brand. 

Though the sale of such counterfeited products at a bargain rate is no surprise, the recognition of the trademark owners’ rights and their rightful compensation from online retailers through this case will have every e-commerce platform in a haste to take down potential infringing products. The heavy damages awarded substantiate that the violation of IP rights will not be taken lightly. If at all there existed a question on the sale of products bearing infringing mark online and its consequences, it has been laid to rest in this case.